Offshore Crypto Exchanges Create Oversight Gaps, FATF Says
The FATF warns that offshore crypto firms exploit regulatory gaps, increasing risks of money laundering and sanctions evasion.Summary
The Financial Action Task Force (FATF) issued a report highlighting that Virtual Asset Service Providers (VASPs) operating offshore create significant risks for money laundering and sanctions evasion. These offshore firms exploit differences in regulatory and supervisory coverage across jurisdictions, hindering effective international cooperation and weakening domestic Anti-Money Laundering (AML) measures. The complexity is compounded because a single firm might be incorporated in one country, use infrastructure in another, and serve global customers online, leaving regulators unsure of jurisdictional responsibility. The FATF urged countries to strengthen oversight of crypto firms serving their markets, even if based abroad, recommending that governments require offshore VASPs to register or license when targeting domestic users. This warning follows a previous FATF report flagging risks associated with peer-to-peer stablecoin transfers without regulated intermediaries, which also weakens AML oversight.
(Source：Cointelegraph)